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From Lean Startup to Agile Enterprise

Don't forget to check out my latest book, Directing the Agile Organisation (http://theagiledirector.com/book), if you like the ideas raised in this presentation.

From #AgileIndia2014

Traditional models of management and corporate governance are failing to keep up with the needs of the modern economy. Change, both technological and cultural, is occurring at faster rates than ever before. In this climate, modern enterprises will live or die on their ability to adapt. This is where Agile, and Agile Business Management, come in. Agile is change; changing how you think, changing how you work and changing the way you interact. This is important whether you are a software developer or a CEO.

In this presentation, Evan will provide engaging and enlightening case studies of Agile beyond IT; from lean startups to large enterprises. These will be reinforced with practical approaches for the leadership of teams, divisions and businesses.

Taking the successful concepts and methods from the Agile movement and Evan's new book "Directing the Agile Organisation", Agile Business Management is a framework for the day-to-day management of organisations regardless of industry, size or location. We will discuss processes, techniques, and case studies for the 4 key domains from Agile Business Management;

1. You, the Agile Manager - What makes a good manager and how do their responsibilities change?
2. Integrated Customer Engagement - Collaboration and communication techniques to build trust and deliver Customer needs efficiently, with minimal waste, and to everyone's satisfaction.
3. The Structure of an Agile Organisation - Efficient, transparent and collaborative techniques to manage empowered staff.
4. Work, the Agile Way - Managing all types of business functions, from software, HR, finance to legal, by using Just-In-Time planning and Incremental or Continuous Delivery processes.

Ultimately, the goal of this presentation is to make you think about your role as a leader.

Assuming you're not talking about traditional agile (where I would consider it to be becoming mainstream), there aren't many statistics on organisations adopting Agile Business Management, or even just adaptable business practices. Based on my experience, I still expect it to be a fairly small number. There are many organisations moving towards this approach, but it is by no means an industry standard, yet...

My book, Directing the Agile Organisation, has a number of case studies of where Agile has been used outside of IT. http://agilebusinessmanagement.org has some additional case studies as well.

Good morning, Let’s start with an informal survey. Hands-up if any of you have heard the terms “Agile” or “Lean” in the context of software or manufacturing? …Great, now I want each of you to put some of your preconceived ideas aside. For those who don’t know;Agile is a set of values, principles, techniques and frameworks for the adaptable, incremental &amp; efficient delivery of work. Originally developed for the software industry, they can be applied to any type of work including finance, sales, HR, marketing, corporate strategy, leadership, and more. In thecontext of the modern economy, conventional models of business management are failing to keep up with the rapidly changing cultural and technological environment and a different approach is necessary.Enter Agile Business Management; an adaptiveapproach to business management and corporate governance. We’re all here because business growth is important to us. For the next 15 minutes, I’m going to provide you with some principles and techniques that focus on business agility as a means of promoting business growth. Ultimately, this can only be achieved by improving communication, collaboration, and deliveringcontinuously while remaining responsive to change. So, let&apos;s start with a simple definition. Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently.

They failed to adapt. They relied on traditional business models &amp; strategies which failed them. Most importantly, they couldn’t keep up.

Add ABM/GDAC logo

Once upon a time, in a country about 10,000 km awayWe value individuals and interactions over processes and tools.We value [completed Customer Requirements] over comprehensive documentation.We value customer collaboration over contract negotiation.We value responding to change over following a plan.

Once upon a time, in a land about 10,000 km away, there was a business.Now this business had a problem; they were successful. This may not seem like a problem to you, but this company knew that success in a single domain, does not make for a robust business model, and can be fleeting. So they looked inward to find ways of being adaptable, of structuring themselves so that they can leverage changing market needs while continuing to deliver to their customers expectations. Does this sound familiar to anyone.

Validated Learning

Actionable Metrics NOT vanity metrics

Validated Learning

MVPFirst, you need to understand that agile work, whether it is for an external or internal customer, is built around just-in-time planning and the controlled incremental or continuous delivery of products and services. These approaches allow the organisation to adapt quickly when scope &amp; circumstances change. With both approaches, teams regularly deliver partial, but still functional, products to their customers. Through this incremental approach, the product will continue to evolve as each iteration builds upon the last. Incremental Delivery is the planning and delivery of related Requirements in short, fixed-time blocks. Whereas Continuous Delivery is the planning and delivery of related, or unrelated, Requirements as they are identified and prioritised. Iterative delivery is primarily used for planned (or plannable) work where the effort to deliver is weeks to years or where there are multiple related requirements. Continuous delivery is primarily used for ad-hoc, or on-demand, work where the effort to deliver is hours to days.

takes a long timeFor this to work, we need to create an organisational structure that promotes increased communication, trust and empowerment of your Teams while providing a direct connection between the teams and customers. In this context, each cross-functional Agile Team is typically between 5-9 full-time staff, where the whole Team works towards a single, specific outcome.With self-organising and cross-functional Teams taking personal responsibility and accountability, agile businesses can operate effectively with a lean hierarchy. That is, removing all extraneous layers of management between the CEO, or equivalent, and junior Team Members, whilst still remaining efficient and functional.

This is an important point; staff engagement goes to the heart of agile business management. Though it has its share of criticism, Maslow’s hierarchy of needs can be a useful model. Agile Business Management focuses on engaging staff at the level of ‘self-actualisation’, by emphasising creativity, problem solving and personal empowerment.

- executive team- committees

The Board needs to be involved in the development of the Agile corporate strategies, and is responsible for monitoring the integrity, and effectiveness, of the Agile Business Management practices. In addition to their legally binding responsibilities, Agile Boards need to apply greater due diligence to the governance of their organisation. This is not due to a lack of trust in their chosen executive, but because an Agile organisation can, and will, adapt and change rapidly. Because of this, the Board needs to work closely with the executive, to remain informed, so they can make appropriate governance decisions.In order to deliver on their Agile obligations, the Board should expect greater transparency and communication from the organisation and the executive. This, in turn, improves their ability to act, in good faith, in the best interest of the organisation and its shareholders.

1 Monthly or quarterly budgets: By reducing the duration of each budget, organisations can tailor funding to meet the current needs of a Team, or Department. As most budget proposals will be identical, or nearly identical, to previous months, there is negligible overhead in managing multiple, short, budgets. Teams and Departments are encouraged (and in some cases incentivised) to be innovative with their existing budgets, and, where possible, reduce outgoing expenditure.2 Team level contingency: As part of their monthly budget, allocate each Team a contingency budget (usually ~20%) to spend at their discretion, either in the delivery of Customer Requirements, or as a mechanism to innovate change within the organisation. Unused contingency should carry over, to encourage sensible spending, rather than the traditional ‘use it or lose it’ approach.3 Staff welfare: Departmental and Team budgets are planned around ensuring delivery of the Customer Requirements, while maintaining a sustainable workload for each Team. From a budget planning perspective, it can help to visualise your Agile Team as a pipeline, as shown in Figure 48. The width of the pipe is your Team size, and the length is the time available to deliver. If a new, high priority, Requirement comes into the pipe, and as an Agile Team this is encouraged, the lowest priority Requirement will fall out the end. In Agile terms, the Velocity of each Team doesn’t change just because you give them more work. New research actually suggests that sustained overtime can lead to a significant reduction in productivity , , , . If your Customer wants you to deliver the new Requirement, as well as all the older Requirements, then the pipe will need to be widened (new staff added), or lengthened (additional time given), both of which will have an impact on the quote and/or budget for the Customer.

The width of the pipe is your Team size, and the length is the time available to deliver. If a new, high priority, Requirement comes into the pipe, and as an Agile Team this is encouraged, the lowest priority Requirement will fall out the end. In Agile terms, the Velocity of each Team doesn’t change just because you give them more work. New research, and bit of common sense, suggests that sustained overtime can lead to a significant reduction in productivity.If your Customer wants you to deliver the new Requirement, as well as all the older Requirements, then the pipe will need to be widened (new staff added), or lengthened (additional time given), both of which will have an impact on the quote and/or budget for the Customer.

This also breaks down the traditional business functions to focus on outcomes. A team responsible for developing a tender may consist of 2 pre-sales operational experts, 2 technical writers, 1 business analysts and 1 sales professionals and 1 accountant. Supporting business functions, such as human resources or finance, may have common ‘core’ teams, but bring in new team members from across the organisation as required. Large outcomes, such as new projects, may form and reform teams throughout the life of the project to bring in skills and expertise ‘on-demand’.This means a change in the way we think about our organisation. Rather than see the organisation as a pyramid, with executives at the top, graduates and entry level positions at the bottom and everyone else in between; start to think of it has a bee-hive. Hundreds of cells, collaborating towards common goals and outcomes, but ultimately independent in action. A change from a traditional hierarchy towards open, transparent and self-empowered individuals &amp; teams.

You can have the best management, the most empowered teams, but unless you have a product or service your customers need, you won’t get very far. So, the question you need to be asking yourself is, “what do my customers need”? Who better to answer that question, then your customers themselves? This brings us to the second domain of Agile Business Management; the regular, and ongoing, fulfilment of Customer needs, through a collaborative and Incremental approach. You want to build partnerships; you want to be the only one your customer thinks of when they need something. As an agile business, you achieve this by integrating your Customer directly within the work process, this grants them co-ownership, as well as co-responsibility, for delivery. Practically, this means that your Customer is responsible for defining, and ordering, the major Requirements, working with the Teams to ensure appropriate outcomes, and undertaking quality control, including final User Acceptance Testing. Your customer is context sensitive, and can be internal (e.g. the finance division) or external (e.g. a paying client). Either way, they, or their delegated representative, need to partner with you for delivery. This is the hardest change to make. It involves a significant cultural shift with external parties who you have no direct control over, but the benefits are significant.

So, how are you going to build this partnership? The trust triangle is simple, but useful, metaphor for this. Starting off at reference trust; this is where I trust you because a common, trusted, 3rd party has recommended you to me. Once we agree to work together, I trust you because we have a contract. A formal document, with penalties, that forms the basis of our relationship. Most customer relationships do not go past that point. Over time, and as we work together, we will begin to form personal relationships, and trust becomes build on our shared history. The ultimate goal of our relationship is to become partners, where you and I share the same goals and outcomes.

Workflow tools

RedundanciesAt all levels, whether you are a team leader or CEO, as an Agile Manager you are responsible for facilitating day-to-day operation, managing risk, providing governance oversight, and directing the strategic outcomes of the organisation.Put simply, it means that you point your staff in the right direction, and make sure there is nothing, internal or external, in their way.

Testing an output and Testing an Idea (A/B testing)

Let’s finish off by looking at our original definition of business growth; Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently. Over the last 15 minutes we have looked at some of the mechanisms from the lean and agile traditions that we can apply for adaptable businesses and sustainable business growth. And I’ll leave you on that note. Any questions.

Let’s finish off by looking at our original definition of business growth; Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently. Over the last 15 minutes we have looked at some of the mechanisms from the lean and agile traditions that we can apply for adaptable businesses and sustainable business growth. And I’ll leave you on that note. Any questions.

From Lean Startup to Agile Enterprise

1.
FROM
LEAN STARTUP
TO
AGILE ENTERPRISE
EVAN LEYBOURN

2.
CHRYSLER, DELPHI,
TEXACO, KODAK, LTV,
COMPAQ, DIGITALWHAT DO THESE COMPANIES HAVE IN COMMON

25.
AGILE KEY
PERFORMANCE
INDICATORSIS THE CUSTOMER, OR CUSTOMER
REPRESENTATIVE, ENGAGING WITH THE TEAM
REGULARLY?
IS THERE A REDUCTION IN IDENTIFIED DEFECTS
BY CONSUMERS (NOTE: CONSUMER, NOT
CUSTOMER)?
IS THE TEAM/PERSON MEETING AGREED DUE
DATES?
ARE QUALITY CONTROL TESTS OCCURRING
DURING EVERY ITERATION?
IS THE TEAM ENGAGING WITH THE CUSTOMER,
OR CUSTOMER REPRESENTATIVE, REGULARLY?
IS THE CUSTOMER HAPPY WITH THE WORK
BEING PRODUCED?
HAVE OVERHEAD COSTS (E.G. ADDITIONAL
MEETINGS, DELIVERY/RELEASE COSTS, DELAYS)
BEEN REDUCED?